POMCO Vice President Discusses Health Care Cost Drivers, HSAs at National Conference
3/30/2006
Stagnant plan designs have insulated consumers from the true costs of health care, fueling increased employer interest in Health Savings Accounts (HSAs) and other high-deductible health plans (HDHPs), according to Vanessa Flynn, POMCO vice president of Client Services. Flynn discussed this and other benefits trends at the recent 37th annual conference of the North American Association of Educational Negotiators in Clearwater, Fla.
According to Flynn, the continued skyrocketing cost of prescription drugs, coupled with other cost drivers including newer medical technologies and increased utilization of services by an aging population, have necessitated the need for employers to consider creative, cost-savings solutions. |  |
HSAs, which are accounts used in combination with an HDHP that let employees and their employers contribute pre-tax, interest-earning dollars to cover future medical, retirement or long-term care premium out-of-pocket expenses up to the deductible amount, have received increased interest since being touted by President Bush. In fact, more than three million Americans are now covered by HSAs -- more than triple the number of enrollees from one year ago.
"The theory behind HSAs is that they will better motivate employees to be more educated, prudent health care consumers," Flynn said. "The question remains whether the average employee will want that responsibility. And even if they do, employers will have to invest a lot of time re-educating their workforce on the intricacies of HSAs and other high-deductible health plans."
Flynn added that there are other things employers should also consider before offering HSAs:
- Know your employee population, and analyze the health care utilization of your workforce to determine where most of your claims expense is occurring. For example, if a large segment of your employees has chronic health problems, an HSA would likely not be a good fit.
- Employees need to be kept informed of their health care expenses so that projections of future health costs can be estimated and deposited in their HSA.
- High out-of-pocket expenses may lead employees to delay getting care they need.
A 2005 SHRM survey reported that 31 percent of people in high-deductible health plans delayed or avoided needed care. This was especially pronounced with people earning less than $50,000.